BAT Strengthens U.S. New Category Portfolio

The tobacco company has acquired Dryft's Modern Oral business.

November 04, 2020

LONDON—British American Tobacco PLC announced that the U.S. business of the BAT Group (BAT) has acquired the nicotine pouch product assets of Dryft Sciences LLC (Dryft), a U.S.-based Modern Oral nicotine product company.

This acquisition expands BAT’s Modern Oral portfolio in the United States from four to 28 product variants. It follows the acceptance of Dryft’s recent Pre-Market Tobacco Product Application (PMTA) submission for filing by the U.S. Food and Drug Administration. The enhanced portfolio will include a wider range of nicotine strengths and flavors providing adult nicotine consumers with a greater degree of choice, covering all key consumer preferences. This will significantly strengthen BAT’s portfolio in a fast-growing nicotine category in the United States.

BAT said it will rebrand Dryft’s U.S. portfolio under its global Modern Oral brand, VELO, and expects to accelerate growth through superior distribution, marketing and channel capabilities. 

The acquisition demonstrates BAT’s continued commitment to its purpose, to build A Better Tomorrow by reducing the health impact of its global business, which entails “committing to providing adult consumers with a wide range of enjoyable and less risky products; continuing to be clear that combustible cigarettes pose serious health risks, and the only way to avoid these risks is not to start or to quit; encouraging those who otherwise continue to smoke, to switch completely to scientifically-substantiated, reduced-risk alternatives; and tracking and sharing progress of our transformation,” the company said.

BAT aims to accelerate the growth of its new category revenues at a faster rate than its total revenue, reaching more than $6.5 billion in 2025. BAT aims to reach 50 million consumers of non-combustibles worldwide by 2030. Today, BAT’s non-combustible products are available in more than 50 countries across the globe.

“[The] announcement underscores our societal commitment to accelerate our transformation and build A Better Tomorrow. Our multi-category strategy is key to our transformation,” said Jack Bowles, CEO of BAT, in a press release. “The addition of Dryft to our U..S Velo brand is a major step forward, further enhancing our successful vaping and oral portfolio.”

Guy Meldrum, CEO of Reynolds American Inc., added, “The modern oral category in the U.S. is developing rapidly. We are excited to expand the portfolio of VELO products to meet the evolving preferences of adult consumers. We are confident that, leveraging our strong in-market execution capability, the new VELO portfolio will contribute to accelerated growth.”